4 Je  IS, 


TAXATION  AND  THE  PUBLIC  WELFARE 
By  Wm.  Pierbepont  White,  Utica,  N. 

A Tax  Conference  has  much  to  consider,  particularly  when 
it  is  of  State-wide  importance.  Every  schoolboy  knows  that 
the  assessed  valuation,  both  real  and  personal,  of  the  State  of 
New  York  is  about  ten  billions  of  dollars,  and  that  the 
greater  the  assessed  valuation  the  less  the  tax  ratio  to  obtain 
the  same  revenues  for  governmental  purposes.  Every  school- 
boy also  knows  that  the  State  of  New  York  is  a most  prodi- 
gious tax  gatherer,  and  from  indirect  sources  for  State  pur- 
poses is  in  receipt  of  a revenue  of  between  thirty-five  and 
thirty-seven  millions  per  annum. 

i 

Tax  Levying  Bodies 

In  addition  to  the  State  expenses,  every  county  has  its  own 
government  which  raises  taxes  on  the  property  situated 
within  each  county,  which  are  expended  for  county  purposes. 
Every  township  has  its  form  of  government  and  raises  its 
revenues  for  the  expenses  of  its  government  upon  the  prop- 
erty situated  within  the  borders  of  the  town.  Every  city 
l5^as  its  expenses  and  levies  taxes  on  the  property  situated  in 
the  city  limits.  Every  village  has  its  expenses  and  levies  the 
4'  taxes  for  its  government  upon  the  property  situated  within 
the  village  limits.  Then  in  addition  to  these  departments  we 
have  the  school  districts  and  school  trustees  levying  taxes 
' J upon  the  property  situated  in  the  school  districts,  and  ex- 
^ pended  for  the  purposes  of  education  and  school  maintenance. 
This  is  saying  nothing  of  the  contribution  of  the  State  as  a 
whole  for  its  portion  of  the  federal  revenues  for  the  main- 
tenance of  the  United  States. 


2 


A Prodigious  Tax  Gathering 

In  1908  the  assessed  property  in  the  State  of  Hew  York 
contributed  by  direct  taxation  the  following  amounts  for  the 


following  purposes : 

State  tax  for  stenographers $349,767  00 

Town  tax  for  town  government 6,808,162  00 

Village  tax,  for  village  government 7,455,125  00 

County  tax,  for  county  government 15,341,249  00 

Local  school  tax  for  school  expenses 40,831,851  00 

City  tax,  for  city  government 159,971,059  00 


Total $230,757,216  00 

State  revenues,  indirect  sources 30,828,532  00 


Total $261,585,748  00 

Internal  revenue  payments  to  federal  gov- 
ernment   36,000,000  00 


Total $297,585,748  00 


This,  with  our  population  of  approximately  9,000,000, 
would  make  a cost  per  capita  of  $33  for  each  man,  woman, 
and  child  in  the  State  to  contribute  annually  in  taxes.  But 
as  the  State  and  national  revenues  are  indirect  and  amount 
to  $66,000,000,  by  far  the  greater  portion  of  the  taxation  is 
in  the  direct  class  and  is  received  from  the  ten  billions  of 
assessed  valuation.  If  the  entire  taxes,  both  direct  and  in- 
direct, were  raised  by  a direct  tax  this  would  call  for  a con- 
tribution from  the  assessed  valuation  of  the  State  of  about 
$30  per  thousand,  or  3 per  cent.  The  amount  of  taxation  is 
so  large  that  we  should  take  steps  to  either  have  a more 
economical  administration,  or  if  that  is  impossible,  then  to 
provide  by  intelligent  legislation  the  steps  necessary  to  create 
additional  assets  in  the  State,  so  that  by  doubling  the  State’s 
assets  and  holding  expenses  the  same  the  tax  would  be  re- 
duced from  $30  to  $15  on  the  thousand,  and  the  tax  burden  i 


3 


cut  in  two,  and  the  same  efficient  administrations  maintained 
which  we  have  to-day. 

Uniform  Accounting 

It  is  certain  that  the  uniform  accountings  for  the  city, 
county,  village,  town  and  school  districts  which  are  being 
put  into  operation  under  our  statutes  will  bring  about  a very 
much  more  efficient  administration  in  the  disbursement  of 
our  taxes. 


Growth  of  Population  and  Wealth 
Since  1860  the  population  of  this  state  has  increased  134 
per  cent,  that  is,  from  3,800,000  people  to  a little  over 
9,000,000  people.  In  the  same  period  -of  50  years  our  tax- 
able wealth  has  increased  606  per  cent,  rising  from  $1,419,- 
000,000  to  a little  over  $10,000,000,000.  This  immense  in- 
crease in  population  and  wealth  calls  for  a corresponding  in- 
crease in  the  tax  contributions  and  particularly  for  the 
State’s  share  in  the  construction  and  maintenance  of  her 
waterways  and  the  construction  and  maintenance  of  her 
highways. 

State’s  Canal  and  Highway  Policies 
For  nearly  one  hundred  years  the  construction  and  main- 
tenance of  the  Erie  canal  and  its  enlargement  has  been  the 
recognized  policy  for  the  upbuilding  of  the  commercial 
interests  of  this  state.  Eor  ten  years  it  has  also  become  the 
recognized  policy  of  this  State  to  build  and  maintain  a 
system  of  State  highways  for  the  upbuilding  of  the  values  of 
the  farms  and  the  bringing  of  their  product  more  cheaply  to 
market.  The  State  of  Hew  York  has  therefore  under  way 
in  the  construction  of  the  Barge  canal,  and  the  completion 
of  the  highway  system,  the  steps  necessary  to  make  this  State 
the  Mecca  of  population  and  wealth,  seeking  employment  on 
the  farms  and  in  manufacturing  enterprises.  To  these  two 
steps  should  now  he  added  a revision  of  her  tax  laws  in  order 
that  the  taxes  levied  upon  corporations  employing  labor 
should  be  less  burdensome  or  at  least  no  greater  than  the 
amount  of  taxes  paid  by  similar  industries  under  similar 


4 


conditions  in  other  parts  of  the  Union,  in  order  that  we  may 
add  two  or  three  thousand  industries  to  those  we  already  have 
in  the  State.  What  is  meant  by  this  is  readily  shown  by  the 
following  table,  prepared  by  H.  Lawrence  White  from  the 
tenth  census  reports  : 


Value  Capital 

of  farm  invested  in 

property  manufacturing 

1850  $650,000,000  $99,000,000 

1860  936,000,000  172,000,000 

1870  1,494,000,000  366,000,000 

1880  1,216,000,000  514,000,000 

1890  1,139,000,000  1,130,000,000 

1900  1,069, 000', 000  1,651,000,000 


Value  Value  of 

of  farm  manufactured 

products  products 

1850  Not  given  $237,000,000 

1860  Not  given  378,000,000 

1870  $253,000,000  785,000,000 

1880  178,000,000  1,080,000,000 

1890  161, 000,000  1,711,000,000 

1900  245,000,000  2,175,000,000 


Build  Values  m the  State 

One  can  readily  see  from  these  tables  that  the  farm  prop- 
erty in  the  fifty  years  has  increased  64  per  cent,  while  the 
investments  in  manufacturing  properties  have  increased 
1567  per  cent.  The  value  of  farm  products  at  the  beginning 
and  end  of  the  periods  mentioned  are  substantially  the  same, 
but  the  growth  of  the  value  of  manufactured  products  has 
been  tremendous.  The  deduction,  therefore,  is  that  New 
York’s  policy  of  developing  the  Barge  canal  will  increase  the 
number  of  manufacturing  plants  in  the  State  more  rapidly 
than  any  other  step  that  can  be  taken,  and  the  development 
of  her  highways  will  carry  these  values  to  the  present  in- 
accessible parts  of  the  State ; but  to  do  this  more  rapidly 
there  should  be  a study  of  the  question  of  taxation  so  as  to 
make  this  State  the  Mecca  of  manufacturing  corporations,. 


5 


as  the  taxable  wealth  these  industries  bring  to  a community 
far  outstrips  the  increase  in  farm  values. 

No  one  taking  up  this  subject  for  the  first  time  should 
attempt  to  understand  it  without  a thorough  understanding 
of  the  geographical  situation  and  conditions  of  the  State  of 
New  York. 

The  Transcontinental  Pass  Nearest  to  Sea  Level 

New  York  State  controls  within  her  borders,  by  means  of 
the  Hudson  river  and  Mohawk  valley,  the  transcontinental 
pass  across  the  Appalachian  Mountain  system  that  is 
nearest  to  sea  level.  For  this  reason  commerce  must  always 
come  through  this  valley  in  ever  increasing  volumes  on  ac- 
count of  the  low  transportation  rates.  On  account  of  these 
low  transportation  rates,  facilitated  by  the  location  of  the 
Barge  canal,  the  most  ideal  water  and  rail  location  for  the 
receipt  and  distribution  of  manufactured  products  is  to  be 
found  with  the  State  of  New  York. 

Northern  New  York  a Peninsula 

That  third  of  the  State  lying  north  of  the  line  from  Oswego 
to  Utica  and  Utica  to  Albany  is  situated,  so  far  as  railroad 
facilities  are  concerned,  like  a peninsula;  and  on  account  of 
Lake  Champlain  on  the  east  and  Lake  Ontario  on  the  west 
is  unable  to  have  any  east  and  west  railroad  transportation 
and  is  therefore  only  capable  of  north  and  south  development. 

No  Real  East  and  West  Railroads  in  Southern  New 

York 

All  that  two-thirds  of  the  State  lying  south  of  the  Mohawk 
valley  and  the  Erie  canal  is  not  capable  of  real  east  and  west 
railroad  development  because  of  the  fact  that  the  valleys  run 
in  northerly  and  southerly  directions  and  are  not  capable  of 
developing  an  east  and  west  service.  No  train  service  is 
better  in  the  State  of  New  York  than  the  service  through  the 
Hudson  and  Mohawk  valleys.  No  train  service  is  more 
tedious  than  that  northerly  and  southerly  service  connecting 
with  the  east  and  west  service.  The  above  is  the  geographical 


G 


situation  of  this  State  and  must  be  thoroughly  comprehended 
in  any  study  of  its  economical  development. 

Values  Concentrated  in  Narrow  Strip 

Approximately  90  per  cent  of  New  York  State’s  ten  bil- 
lions of  assessed  valuation  lies  in  the  cities  of  New  York  and 
Buffalo  and  within  a territory  five  miles  wide  on  either  side 
of  the  center  line  of  the  Hudson  river  to  Albany,  and  of  the 
Erie  canal  from  Albany  to  Buffalo. 


Table  of  Population  and  Values 


New  York  city  and  all  canal 
and  Hudson  river  counties 
33  counties  not  on  canal  or 
Hudson  river 


Population 

1910 


Assessed  Valuation 
1908 


7,570,988  $8,916,153,337 


1,542,626  749,965,344 


Total 


9,113,614  $9,666,118,681 


Population  Concentrated  in  Narrow  Strip 
Approximately  80  per  cent  of  New  York  State’s  nine  mil- 
lions of  population  secure  their  livelihood  in  the  area  just 
above  described.  The  problem  is  to  provide  in  the  State  of 
New  York  ample,  healthy  and  remunerative  occupation  for 
the  population  in  this  restricted  area  and  also  healthy  and 
remunerative  occupation  for  the  agricultural  districts  on 
either  side. 

Man  Follows  tiie  Pay  Roll 

Wealth  and  population  do  not  come  first  to  a community, 
but  are  brought  there  by  the  establishment  of  an  industry 
with  a pay-roll.  Men  desiring  employment  seek  the  pay- 
roll, and  wealth  thus  developed  from  this  pay-roll  creates 
taxable  values,  for  the  pay-roll  is  used  to  build  homes, 
schools,  churches,  then  streets  are  paved  and  municipal 
government  follows,  with  the  lighting  of  the  streets,  fire 
departments  and  police  protection.  Every  village,  every 


city,  every  locality,  grows  only  when  it  secures  additions  to 
its  pay-rolls,  and  this  additional  money  draws  additional  men 
to  the  community  who  seek  employment.  The  State  which 
understands  economical  development  and  economic  prin- 
ciples is  thus  able  to  legislate  intelligently  and  thus  bring 
within  its  borders  industries  having  pay-rolls,  which  will 
then  be  followed  by  the  men  desiring  work,  and  State  wealth 
is  thus  created. 

New  Yokk  State  Slow 

The  western  and  southern  states  and  even  those  directly 
adjoining  us  are  more  alive  to  these  economic  principles  and 
are  studying  harder  to  draw  industries  and  pay-rolls  to  them, 
than  is  the  State  of  New  York.  Governor  Dix  says  in  his 
message  to  the  Legislature,  “ During  a score  of  years  prior 
to  1900  New  York  increased  its  manufactured  products  100 
per  cent,  Pennsylvania  157  per  cent,  Illinois  200  per  cent, 
Ohio  and  Indiana  150  per  cent  each.”  If  New  York  State 
is  desirous  of  securing  the  greatest  growth  she  must  not  only 
provide  water,  rail  and  highway  transportation  cheaper  than 
it  is  provided  in  any  other  State,  but  she  must  adjust  her 
burden  of  taxation  in  such  a way  as  to  make  this  State  the 
Mecca  of  manufacturing  enterprises. 

Tax  Laws  Must  be  Revised 

In  order  to  have  New  York  State  outrank  all  others  in 
securing  pay-rolls  these  principles  must  be  followed.  In  the 
first  instance,  factory  sites  must  be  created,  better  located  in 
regard  to  shipping  facilities  than  the  factory  sites  in  any 
other  State.  Taxes  must  be  uniform  on  all  corporations 
having  a pay-roll,  and  must  in  no  event  be  burdensome  on 
the  industry  providing  the  pay-roll.  In  order  to  secure  the 
location  of  the  industry  in  this  State  and  to  prevent  those 
that  are  already  here  from  moving,  the  method  of  taxation 
would  be  more  attractive  than  that  levied  by  any  other  state 
in  the  Union.  Low  freight  rates  for  both  incoming  and  out- 
going freight  must  also  be  assured.  The  State  must  be  able 
to  offer  low  rents,  good  homes,  good  schools  and  churches,  so 
i that  the  people  seeking  employment  may  be  happy,  honor- 


? 


8 


able  and  self-respecting,  with  proper  educational  ambitions 
for  the  welfare  of  their  children. 

How  to  Attract  Wealth  from  Other  Places 

The  State  of  Hew  York  will  shortly  be  able  to  offer  be- 
tween Albany  and  Buffalo  the  most  available  factory  sites 
in  the  United  States.  They  will  be  adjacent  to  water  trans- 
portation on  the  canal,  and  will  have  railroad  transportation 
which  parallels  the  water  transportation  throughout  the 
State.  This  permits  the  industry  locating  in  this  area  to 
have  the  lowest  freight  rates  across  the  continent  or  to  the 
seaboard  obtainable  in  the  United  States.  The  immense 
population  of  the  State  of  Hew  York  provides  a more  ac- 
ceptable opportunity  for  men  to  find  employment  and  for 
industry  to  find  employees  than  can  be  found  in  any  other 
State  of  the  Union.  The  proper  understanding  of  these 
facts,  plus  the  proper  method  of  taxation,  should  draw  to 
the  State  of  Hew  York  more  factories  and  more  employees 
and  build  State  wealth  more  rapidly  than  the  same  efforts 
would  secure  an  equal  amount  of  taxable  wealth  for  any 
other  state  in  the  Union.  This  statement  may  well  be  illus- 
trated by  the  following  table  of  figures,  prepared  by  H. 
Lawrence  White,  showing  what  150  factories  located  on  an 
industrial  harbor  adjacent  to  the  Barge  canal,  with  ample 
railroad  facilities  connecting  with  the  Hew  York  Central, 
would  mean  to  the  the  city  of  Utica  and  to  the  State  of 
Hew  York. 

Using  the  United  States  census  reports  and  carefully 
studying  the  growth  of  cities,  employees,  wages,  the  value  of 
manufactured  product,  and  the  assessed  valuation  per  capita 
for  the  cities  reported,  one  is  able  to  state  that  if  one  could 
locate  in  a city  154  factories,  employing  one  hundred  men 
per  factory,  and  receiving  an  average  wage  of  only  $455 
per  annum,  and  bringing  to  the  city  an  average  of  six  and  a 
fraction  persons  to  each  employee,  that  these  154  factories 
would  increase  the  population  100,000  people,  and  increase 
the  assessed  valuation  of  the  city  $80,000,000,  that  the  an- 
nual pay-roll  would  be  $7,000,000,  and  the  increase  in  the 


9 


manufacturing  product  $30,000,000;  while  the  increase  to 
the  local  trade  to  the  local  merchants  would  he  $12,000,000. 
The  table  is  as  follows: 

15,400  employees. 

100,000  increase  in  population. 

$7,000,000  increase  of  annual  factory  pay-roll. 

$12,000,000  increase  in  city  retail  store  trade. 

$30,000,000  increase  in  value  of  manufactured  products. 

$80,000,000  increase  of  taxable  property  (full  valuation). 

A study  of  the  average  growth  of  cities  leads  to  the  con- 
clusion that  the  100,000  people  would  require  over  10,000 
acres  upon  which  to  build  their  homes  surrounding  the  in- 
dustries in  which  they  secured  employment.  A slow  grow- 
ing city  of  100,000  population  would  make  the  above  gam 
in  between  thirty  and  forty  years,  increasing  at  a rate  of 
20  per  cent  to  25  per  cent  every  ten  years.  A progressive 
city,  increasing  at  the  rate  of  35  to  45  per  cent  in  every  ten 
years  would  make  the  above  gain  in  between  fifteen  and 
twenty-five  years. 

Immense  Values  Possible 

If  this  same  development  were  duplicated  in  Albany, 
Schenectady,  Utica,  Pome,  Syracuse,  Lyons,  Batavia, 
Rochester,  and  Buffalo,  or  at  any  other  point,  the  taxable 
assets  in  each  of  these  communities  would  increase  in  twenty 
years  $80,000,000  and  these  ten  localities  would  add  to  the 
State’s  wealth  $800,000,000  in  the  twenty  years. 


Transportation  will  Make  Farm  Values  Increase 

The  peculiar  geographical  situation  of  the  valleys  of  our 
State  requires  that  no  development  of.  our  industry  and 
population,  by  locating  manufacturing  enterprises  in  this 
narrow  strip  of  land  across  the  State,  should  be  undertaken 
unless  proportionate  benefits  can  be  secured  for  the  agri- 
cultural interests  and  the  balance  of  the  State.  The  primary 
* reason  for  the  State’s  undertaking  the  expenditure  of 

A 


» 


10 


$50,000,000  for  highway  improvement  and  the  creation  of 
a system  of  highways  was  for  the  purpose  of  bringing  values 
to  our  undeveloped  farm  areas  and  putting  our  neglected 
and  abandoned  farms  in  touch  with  the  east  and  west 
transportation.  The  State,  under  the  present  $50,000,000 
highway  improvement  bond  issue,  with  its  contributions 
from  the  counties  and  towns,  intends  to  create  a system  of 
main  highways  of  approximately  10,000  miles.  This  will 
leave  no  farm  farther  than  five  miles  from  an  improved 
highway,  and  then  we  will  have  the  transportation  question 
of  our  State  handled  as  follows  (figures  taken  from  official 


records  of  1906)  : 

Miles 

Canals 639 

Street  railroads  (mostly  in  cities) 1,940 

Steam  railroads  8,249 

Highways 80,000 


The  State  highway  department  has  charge  over  these 
80,000  miles  of  highway  and  is  constructing  with  proper 
speed  and  attention  the  main  system,  having  completed  some 
2,500  miles  already,  and  is  also  bringing  the  lateral  roads 
to  a greater  state  of  perfection  than  has  ever  heretofore  been 
accomplished.  These  roads,  main  and  lateral,  will  also  make 
accessible  the  smaller  manufacturing  plants  whose  products 
will  permit  a higher  freight  rate  to  be  charged  against  it  on 
its  way  to  the  consumer. 

Dense  Population  Will  Make  Farm  Values  Increase 

The  State  of  Hew  York  is  destined  to  receive  a dense 
population  in  the  narrow  strip  ten  miles  wide  extending 
from  Hew  York  to  Buffalo,  and  to  have  a larger  rural  popu- 
lation by  reason  of  its  improved  highways  leading  into  the 
agricultural  sections.  The  dense  population  in  this  narrow 
strip,  and  the  location  here  of  the  manufacturing  enterprises 
will  also  create  values  in  the  farm  lands  throughout  the  State. 

Using  the  census  figures  of  1900  for  comparing  the  farm 


11 


values  and  farm  products  of  New  York  and  Massachusetts, 
and  using  the  same  number  of  acres  to  make  the  comparison 
more  fair,  a farm  of  100  acres  in  Massachusetts  shows  farm 
products  of  $1,081  per  annum  not  fed  to  live  stock,  where 
the  New  York  State  farm  of  100  acres  shows  $803  of  values 
of  farm  products  not  fed  to  live  stock.  Therefore,  the 
Massachusetts  farmer  owning  a 100-acre  farm  is  $278  per 
annum  better  off  than  a New  York  State  farmer.  Taking 
the  total  number  of  farms  in  New  York  State  and  multiply- 
ing it  by  $278,  the  gain  in  the  value  of  farm  products  per 
annum  would  mean  $63,000,000  more  to  the  New  York 
State  farmers,  if  he  could  get  the  Massachusetts  price  for 
his  farm  products.  In  ten  years  this  increased  earning 
power  would  amount  to  over  $630,000,000  — approximately 
the  value  of  all  farm  property  in  this  State  in  18 501. 

Massachusetts  in  1900  had  20  cities  with  a population  of 
25,000  people  or  over,  while  New  York  had  only  12  cities 
of  the  same  character.  Massachusetts  in  1909  had  a popu- 
lation of  348  people  to  the  square  mile  of  area,  while  New 
York  State  had  but  152,  and  if  the  population  of  New  York 
City  were  taken  out  only  80  people  to  the  square  mile  of 
area.  The  increased  earning  power  of  the  Massachusetts 
farms  is  because  of  her  great  industrial  population,  well  dis- 
tributed in  her  small  thriving  cities  throughout  the  State. 
If  the  New  York  State  farms  were  raised  to  the  same  value 
as  the  Massachusetts  farms,  as  shown  by  the  federal  census 
of  1900,  it  would  increase  the  values  to  the  New  York  State 
farmers  over  $226,000,000.  Massachusetts  in  1900  had  74 
people  to  every  farm,  close  at  hand  to  the  farm  products, 
whose  needs  the  farmers  had  to  supply.  At  this  same  date, 
New  York  State  had  a population,  with  the  population  of 
New  York  City  out,  of  only  17  people  to  each  farm,  to  con- 
sume the  farm  products,  and  this  is  one  reason  for  the  differ- 
ence in  value  in  farm  lands  in  the  two  states. 

Canals,  Highways,  and  Better  Methods  of  Taxation 

New  York  State  should  continue  her  honest  and  efficient 
i management  in  the  construction  of  the  Barge  canal  and  the 


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construction  of  her  highway  system,  and  also  ask  of  the 
Legislature  reasonable  amendments  to  the  tax  laws  which 
shall  seek  to  accomplish  the  securing  of  additional  taxable 
assets  in  each  community,  while  at  the  same  time  changing 
the  method  of  taxation  on  both  real  and  personal  property 
of  all  corporations  having  pay-rolls  and  employing  people, 
in  order  that  these  industries  may  be  made  to  stay  within 
the  borders  of  the  State  and  others  induced  to  come  here. 


